Did you know that Facebook’s targeted ads—the advertisements that take the data you provide to offer ads specific to you—pull in information from other sources (including the stuff you do offline)?

That’s why it’s more important than ever to understand how they do this and why it matters.

Firstly, the basics of how Targeted Ads work online:

Lifehacker say that the most obvious example of a targeted ad in Facebook is when you are looking at something from a company—say Target—and Facebook then shows you an ad on the right side bar or in the newsfeed that simply says, “[Name – (of one of your Facebook friends)] likes Target.” Basically the things that you and your friends like will help determine what ads everyone on your friends will list see. Any ad you click on will mean you are more likely to see other similar ads.

Most of you would have had an idea of how Facebook were targeting you when you were looking at your newsfeed. And you know that they also track what you are doing when you are on other sites and platforms, particularly if you log into these using your Facebook log in. Lifehacker agree that this can be unsettling and if you’re concerned about your privacy and you don’t want your online habits contributing to advertisements, or if you don’t like the idea of Facebook collecting data about you that you’re not willfully providing, they offer some tools to keep that from happening online here …

But did you also know that Facebook are tracking what you are doing offline too?  Lifehacker inform us that with a few recent partnerships, Facebook is now going to use what you buy in real life stores to influence and track the ads you see. But how will they do that?

Facebook is now combining the information they have with information from data collection companies. These companies already collect information about you through things like store loyalty cards, mailing lists, public records information (including home or car ownership), browser cookies, and more. For example, if you buy a bunch of detergent at Woolworths, and use your Rewards card to get a discount, that information is cataloged and saved.

Data collecting companies know everything from race, gender, economic status, buying habits, and much more. They can then sell this data to advertisers or corporations. But it is when it’s combined with your information from Facebook, that it is so much more valuable because it allows advertisers to get an even better idea of what you like, where you shop, and what you buy. Facebook describe it as “trying to give advertisers a chance to reach people both on and off Facebook,” and make advertisements more relevant to you. The New York Times Offers the suggestion that consumers need to become more aware of the data trail they leave behind them and how companies are putting all that data together in new ways to reach them.

Lifehacker suggest that If you like the targeted ads, they should improve even more as the years go on. If you don’t, opting out is always an option. Read more about targeted ads here, as well as how to opt out if you want to …